David Šiška

  1. Error estimates for finite difference approximations of American put option price.

    Authors: David Šiška
    Subjects: Numerical Analysis
    Abstract

    Finite difference approximations to multi-asset American put option price are
    considered. The assets are modelled as a multi-dimensional diffusion process
    with variable drift and volatility. Approximation error of order one quarter
    with respect to the time discretisation parameter and one half with respect to
    the space discretisation parameter is proved by reformulating the corresponding
    optimal stopping problem as a solution of a degenerate Hamilton-Jacobi-Bellman
    equation.

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